Exhibit 10.2


 


RED
ROBIN GOURMET BURGERS, INC.


RESTRICTED
STOCK GRANT AGREEMENT


 


This Restricted Stock
Grant Agreement (this “Agreement”) between RED ROBIN GOURMET BURGERS,
INC. (the “Company”) and DENNIS B. MULLEN (the “Executive”) is
dated effective August 15, 2008 (the “Effective Date”).


 


RECITALS


 


A.                                   The
Board has adopted, and the stockholders have approved, the Red Robin Gourmet
Burgers, Inc. Amended and Restated 2007 Performance Incentive Plan (the “Plan”);


 


B.                                     The
Plan provides for the granting of restricted stock awards to eligible
participants as determined by the Administrator; and


 


C.                                     The
Administrator has determined that Participant is a person eligible to receive a
restricted stock award under the Plan and has determined that it would be in
the best interest of the Corporation to grant the restricted stock award
provided for herein.


 


AGREEMENT


 


1.                                       Grant
of Restricted Stock.


 


(a)                                  Stock.  Pursuant to the Plan, Executive is hereby
awarded Fifty Thousand (50,000) shares of the Company’s common stock (the “Common
Stock”), subject to the conditions of the Plan and this Agreement (the “Restricted
Stock”).


 


(b)                                 Plan
Incorporated.  Executive acknowledges
receipt of a copy of the Plan, and agrees that, except as contemplated by Section 9
below, this award of Restricted Stock shall be subject to all of the terms and
conditions set forth in the Plan, including future amendments thereto, if any,
pursuant to the terms thereof, which Plan is incorporated herein by reference
as a part of this Agreement.  Except as defined
herein, capitalized terms shall have the same meanings ascribed to them under
the Plan.


 


2.                                       Terms
of Restricted Stock.  Executive
hereby accepts the Restricted Stock and agrees with respect thereto as follows:


 


(a)                                  Vesting.  The Restricted Stock shall vest in equal
increments, and no longer be subject to the Forfeiture Restrictions (as defined
below) on each of December 31, 2011 and December 31, 2012 (the “Time
Vesting Provisions”); provided that; the compensation committee of the Company’s Board certifies by June 1,
2010 that certain performance metrics for the year ended December 31, 2009
have been met (the “Performance Provisions”).  In the event such certification is not
obtained by June 1, 2010, the Restricted Stock shall be forfeited.  Notwithstanding the Time Vesting Provisions,
the Restricted Stock shall immediately vest and no longer be subject to the
Forfeiture Restrictions (as defined below) upon (i) the occurrence of a
Change in Control Event, (ii) the date Executive’s employment is terminated
by reason of death or Total Disability (as defined below), (iii) the
termination of Executive’s employment by the Company without Cause (as defined
in Executive’s Second Amended and Restated Employment 


 

















 


Agreement dated March 10, 2008, as amended on August 15,
2008), or (iv) the termination of Executive’s employment in connection
with a Transition Event (as defined in the Executive’s Second Amended and
Restated Employment Agreement dated as of the date hereof).  In addition, upon a voluntary resignation by
Executive, the Forfeiture Restrictions on a pro rata portion as defined below
(the “Pro Rata Portion”) of the Restricted Stock shall lapse, and the
Pro Rata Portion shall immediately vest. 
The Pro Rata Portion shall be equal to the number of shares of
Restricted Stock which the Executive would have been entitled to at the next
vesting date had the Executive’s employment not terminated, multiplied by a
fraction, the numerator of which shall be the number of days elapsed from the
beginning of the calendar year through and including the date of termination
and the denominator of which shall be the total number of days in the
applicable calendar year.  All other
shares of Restricted Stock under this Agreement will be forfeited.  For example, were such a resignation to occur
on June 30, 2011, 12,397 shares of the Restricted Stock will immediately
vest (25,000 x 181/365) and the remaining 37,603 shares will be forfeited, or
were such a resignation to occur on June 30, 2012, 25,000 shares of the
Restricted Stock would have vested on December 31, 2011, an additional
12,432 shares shall immediately vest on the date of resignation (25,000 x
182/366) and the remaining 12,568 shares will be forfeited.


 


(b)                                 Forfeiture
of Restricted Stock.  In addition to
any possible forfeiture of Restricted Stock as contemplated by Paragraph 2(a) (Performance
Provisions not met or voluntary resignation), in the event of a termination of
Executive’s employment for Cause (as defined in the Second Amended and Restated
Employment Agreement dated March 10, 2008, as amended on August 15,
2008), Executive shall, for no consideration, forfeit all Restricted Stock to
the extent such Restricted Stock is then subject to the Forfeiture
Restrictions.  The obligation to forfeit
and surrender Restricted Stock to the Company upon termination of Executive’s
employment or service and the prohibition against transfer in Paragraph 2(f) below
are herein referred to as “Forfeiture Restrictions.”


 


(c)                                  For
purposes of this Agreement, “Change in Control Event” shall have the
following definition (and not the definition stated in the Plan):


 


(i)                                     The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than 30% or more of either (1) the then-outstanding shares of common
stock of the Company (the “Outstanding Company Common Stock”) or (2) the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of this
definition, the following acquisitions shall not constitute a Change in Control
Event; (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any affiliate
of the Company or a successor, or (D) any acquisition by any entity
pursuant to a transaction that complies with subsections (iii)(A), (B) and
(C) below;


 


(ii)                                  In
the event the Board is a classified board, a majority of the individuals who
serve in the same class of directors that, as of the Effective Date, constitute
the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of that class of 


 


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directors, or in the event the Board is not a
classified board, members of the Incumbent Board cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date whose election,
or nomination for election by the Company’s stockholders, was approved by a
vote of at least two-thirds of the directors then comprising the Incumbent
Board (including for these purposes, the new members whose election or
nomination was so approved, without counting the member and his predecessor twice)
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board;


 


(iii)                               Consummation of a
reorganization, merger, statutory share exchange or consolidation or similar corporate
transaction involving the Company or any of its Subsidiaries, a sale or other
disposition of all or substantially all of the assets of the Company, or the
acquisition of assets or stock of another entity by the Company or any of its
Subsidiaries (each, a “Business Combination”), in each case unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities that were the beneficial owners of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the entity resulting from
such Business Combination (including, without limitation, an entity that, as a
result of such transaction, owns the Company or all or substantially all of the
Company’s assets directly or through one or more subsidiaries (a “Parent”))
in substantially the same proportions as their ownership immediately prior to
such Business Combination of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any entity resulting from such Business Combination or a Parent or
any employee benefit plan (or related trust) of the Company or such entity
resulting from such Business Combination or Parent) beneficially owns, directly
or indirectly, more than 30% of, respectively, the then-outstanding shares of
common stock of the entity resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such entity,
except to the extent that the ownership in excess of more than 30% existed
prior to the Business Combination, and (C) at least a majority of the
members of the board of directors or trustees of the entity resulting from such
Business Combination or a Parent were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or


 


(iv)                              Approval
by the stockholders of the Company of a complete liquidation or dissolution of
the Company;


 


provided, however, that any
of the foregoing events shall constitute a Change in Control Event only
if Executive’s employment with the Company as Chairman of the Board or as Chief
Executive Officer is involuntarily terminated for a reason other than Cause or
Executive voluntary terminates for Good Reason within eighteen (18) months
following such Change of Control Event.


 


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(d)                                 “Good
Reason” means the occurrence of any of the following after the applicable
Change in Control Event: (i) a reduction in Executive’s compensation; (ii) a
relocation of the Company’s headquarters to a location more than twenty (20)
miles from the location of the Company’s pre-Change of Control Event
headquarters; or (iii) a significant reduction in the then-effective
responsibilities of Executive as Chairman of the Board or Chief Executive
Officer without Executive’s prior written consent.


 


(e)                                  “Total
Disability” means a “permanent and total disability” within the meaning of Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended, or as otherwise determined by
the Administrator.


 


(f)                                    Assignment
of Award.  The Restricted Stock may
not be sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of to the extent then subject to the
Forfeiture Restrictions; provided, however, Executive may
transfer the Restricted Stock to any trust or similar entity all of the
beneficiaries of which, or a corporation, partnership or limited liability company
all of the stockholders and other equity holders, limited and general partners
or members of which include any of Executive, one or more of his descendants or
his estate; and provided  further that any such transferee agrees
in writing to be subject to the terms of this Agreement.


 


(g)                                 Certificates.  A certificate evidencing the Restricted Stock
shall be issued by the Company in Executive’s name, or at the option of the
Company, in the name of a nominee of the Company, pursuant to which Executive
shall have voting rights and shall be entitled to receive currently all
dividends until the Restricted Stock are forfeited pursuant to the provisions
of this Agreement.  The certificate shall
bear a legend evidencing the nature of the Restricted Stock, and the Company
may cause the certificate to be delivered upon issuance to the Secretary of the
Company or to such other depository as may be designated by the Company as a
depository for safekeeping until the forfeiture occurs or the Forfeiture
Restrictions lapse pursuant to the terms of the Plan and this Agreement.  Upon request of the Administrator, Executive
shall deliver to the Company a stock power, endorsed in blank, relating to the
Restricted Stock then subject to the Forfeiture Restrictions.  Upon the lapse of the Forfeiture Restrictions
without forfeiture, the Company shall cause a new certificate or certificates
to be issued without legend in the name of Executive for the shares upon which
Forfeiture Restrictions lapsed. 
Notwithstanding any other provisions of this Agreement, the issuance or
delivery of any shares of Stock (whether subject to restrictions or
unrestricted) may be postponed for such period as may be required to comply
with applicable requirements of any national securities exchange or any requirements
under any law or regulation applicable to the issuance or delivery of such
shares.  The Company shall not be
obligated to issue or deliver any shares of Stock if the issuance or delivery
thereof shall constitute a violation of any provision of any law or of any
regulation of any governmental authority or any national securities exchange.


 


3.                                       Income
Tax Matters.


 


(a)                                  Except
as otherwise provided in Section 13, and to the extent specifically
provided in Section 12, Executive shall be solely liable for Executive’s
tax consequences of compensation and benefits payable under this Agreement,
including any consequences of the application of Section 409A of the Code.


 


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(b)                                 In
order to comply with all applicable federal or state income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure
that all applicable federal or state payroll, withholding, income or other
taxes, which are the sole and absolute responsibility of Executive, are
withheld or collected from Executive.


 


(c)                                  In
accordance with the terms of the Plan, and such rules as may be adopted by
the Administrator under the Plan, Executive may elect to satisfy Executive’s
federal and state tax withholding obligations arising from the receipt of, or
the lapse of restrictions relating to, the Restricted Stock, by (i) delivering
cash, check (bank check, certified check or personal check) or money order
payable to the Company, (ii) having the Company withhold a portion of the
Restricted Stock otherwise to be delivered having a Fair Market Value equal to
the amount of such taxes, or (iii) delivering to the Company shares of
Common Stock already owned by Executive having a Fair Market Value equal to the
amount of such tax withholding.  The
delivery of any shares under the preceding subsection (iii) must have been
owned by Executive for no less than six months prior to the date delivered to
the Company if such shares were acquired upon the exercise of an option or upon
the vesting of restricted stock units or other restricted stock.  The Company will not deliver any fractional
shares of Common Stock but will pay, in lieu thereof, the Fair Market Value of
such fractional shares of Common Stock. 
Executive’s election must be made on or before the date that the amount
of tax to be withheld is determined, or else the Company shall be entitled to
elect the method in which Executive’s federal and state withholding obligations
shall be satisfied.


 


4.                                       Status
of Stock.  Executive agrees that the
Restricted Stock will not be sold or otherwise disposed of in any manner that
would constitute a violation of any applicable federal or state securities
laws.  Executive also agrees (i) that
the certificates representing the Restricted Stock may bear such legend or
legends as the Company deems appropriate in order to assure compliance with
applicable securities laws, (ii) that the Company may refuse to register
the transfer of the Restricted Stock on the stock transfer records of the
Company if such proposed transfer would be in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its
transfer agent, if any, to stop registration of the transfer of the Restricted
Stock.


 


5.                                       Binding
Effect.  This Agreement shall bind
Executive and the Company and their beneficiaries, survivors, executors,
administrators and transferees.


 


6.                                       No
Guarantee of Continued Position. 
This Agreement is not a contract for employment and nothing herein shall
supersede or amend the terms of any employment agreement between the Company
and Executive or imply that Executive has a right to continued employment with
the Company.


 


7.                                       Applicable
Law.  This Agreement and all rights
hereunder shall be governed by the laws of Colorado, except to the extent the
laws of the United States of America otherwise require.


 


8.                                       Notice.  Any notice required or permitted to be given
under this Agreement shall be in writing, signed by the party giving the
same.  If such notice is mailed to
Executive, it may be sent by United States certified mail, postage prepaid,
addressed to Executive’s last known address as shown on the Company’s records.


 


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9.                                       Conflicts
and Interpretation.  In the event of
any conflict between this Agreement and the Plan, this Agreement shall
control.  In the event of any ambiguity
in this Agreement, or any matters as to which this Agreement is silent, the
Plan shall govern including, without limitation, the provisions thereof
pursuant to which the Administrator has the power, among others, to (i) interpret
the Plan, (ii) prescribe, amend and rescind rules and regulations
relating to the Plan and (iii) make all other determinations deemed
necessary or advisable for the administration of the Plan.


 


10.                                 Amendment.  The Company may modify, amend or waive the
terms of the Restricted Stock Unit award, prospectively or retroactively, but
no such modification, amendment or waiver shall impair the rights of Executive
without his or her consent, except as required by applicable law, NASDAQ or
stock exchange rules, tax rules or accounting rules.  Prior to the effectiveness of any
modification, amendment or waiver required by tax or accounting rules, the
Company will provide notice to Executive and the opportunity for Executive to
consult with the Company regarding such modification, amendment or waiver.  The waiver by either party of compliance with
any provision of this Agreement shall not operate or be construed as a waiver
of any other provision of this Agreement, or of any subsequent breach by such
party of a provision of this Agreement.


 


11.                                 Tax
Election.  Executive agrees that he
will not make an election described in Section 83(b) of the Code with
respect to the Restricted Stock granted pursuant to this Agreement.


 


12.                                 Section 409A
Savings Clause.  It is the intention
of the parties that compensation or benefits payable under this Agreement not
be subject to the additional tax imposed pursuant to Section 409A of the
Code.  To the extent such potential
payments or benefits could become subject to such Section, the parties shall
cooperate to amend this Agreement with the goal of giving Executive the
economic benefits described herein in a manner that does not result in such tax
being imposed.


 


13.                                 Gross-Up
Payments.


 


(a)                                  Anything
in this Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined that any payment or distribution by
the Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Agreement) (a “Payment”) would be subject to the excise tax
imposed by Code Section 4999 or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as
the “Excise Tax”), then the Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that after
payment by the Executive of all taxes imposed upon the Gross-Up Payment
(including any interest or penalties imposed with respect to such taxes but
excluding any taxes or interest imposed by Section 409A of the Code), the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.  This
provision is intended to override the cut-back provisions of Section 7.7
of the Plan.  Notwithstanding the
foregoing provisions of this Section 13, if it is determined that the
Executive is entitled to a Gross-Up Payment, but that the Payments do not
exceed by $25,000 the greatest amount that could be paid 


 


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to the Executive such that the receipt of Payments
would not give rise to any excise tax (the “Reduced Amount”), then no
Gross-Up Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.


 


(b)                                 Subject
to the provisions of Section 13(c) below, all determinations required
to be made under this Section 13, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made a certified
public accounting firm designated by the Board (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and
the Executive.  If the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control Event, the Board shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm
hereunder).  All fees and expenses of the
Accounting Firm shall be borne solely by the Company.


 


(c)                                  If
the Executive is, or could be, entitled to receive a Gross-Up Payment, pursuant
to Section 13(a) the Executive shall take any position requested by
the Company (a “Requested Position”) on the Executive’s federal income
tax returns with respect to the treatment of the Payment from the Company, any
Gross-Up Payment, the payment of any Indemnified Amount (as defined below), and
the receipt of any refund or interest paid by the government to the Executive
as a result of a Contest (as defined below), provided that: (i) the
Company shall provide the Executive with an opinion from a nationally
recognized accounting firm that there is “substantial authority” for the
Requested Position within the meaning of Code Section 6662; and (ii) the
general long term or senior unsecured corporate credit rating of the Company or
its successor is at least BBB- as rated by Standard & Poors and Baa3
as rated by Moody’s Investor Services at the time the Executive would be
required to take a Requested Position or the Company places in an escrow
account or otherwise provides security reasonably requested by Executive to
ensure payment to the Executive of the indemnity amount that could become due
to the Executive pursuant to the following sentence.  The Company shall indemnify the Executive for
any tax, penalty and interest incurred by him as a result of taking the
Requested Position.  The amount for which
the Executive is indemnified under the preceding sentence (the “Indemnified
Amount”) shall be computed on an after-tax basis, taking into account any
income, Excise or other taxes, including interest and penalties.  The Executive shall keep the Company informed
of all developments in any audit with respect to a Requested Position.  Upon payment of the Indemnified Amount, or
(if the Indemnified Amount is not yet payable) upon the Company’s written
affirmation, in form and substance reasonably satisfactory to the Executive, of
the Company’s obligation to indemnify the Executive with respect to the
Requested Position, and provided part (ii) of the first sentence of
this Section 13(c) is satisfied at such time, the Company shall be
entitled, at its sole expense, to control the contest of any disallowance or
proposed disallowance of a Requested Position (a “Contest”), and the
Executive agrees to cooperate in connection with a Contest, including, without
limitation, executing powers of attorney and other documents at the reasonable
request of the Company.  The Indemnified
Amount shall be payable whenever an amount is payable to the Internal Revenue
Service as a result of the disallowance of a Requested Position.  Following payment by the Company of the
Indemnified Amount, if the Requested Position is sustained by the Internal
Revenue Service or the courts, the Company shall be entitled to any resulting
receipt of interest or refund of taxes, interest and penalties that were
properly attributable to the Indemnified Amount.  If a Requested 


 


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Position is sustained in whole or in part in a final
resolution of a Contest, and if the Indemnified Amount therefore exceeds the
amount of taxes, penalties and interest payable by the Executive as a result of
the Requested Position (determined on an after-tax basis after taking into
account payments made pursuant to the preceding sentence and this sentence),
any such excess portion of the Indemnified Amount shall be treated as a loan by
the Company to the Executive, which loan the Executive must repay to the
Company together with interest at the applicable federal rate under Code Section 7872(f)(2).


 


[Signature Page Follows.]


 


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IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.


 


	
   

  	
  RED ROBIN GOURMET
  BURGERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward T. Harvey

  
	
   

  	
   

  	
  Edward
  T. Harvey

  
	
   

  	
   

  	
  Lead
  Director

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Dennis B. Mullen

  
	
   

  	
  Dennis B. Mullen